Budget 2026: Now NRIs can invest up to 10% directly in Indian equities

Union Budget 2026: Higher shareholding limits and a new PIS route aim to widen overseas participation in Indian stocks

Union Budget 2026: Finance Minister Nirmala Sitharaman on Sunday announced a proposal to double the individual shareholding limit for persons resident outside India (PROI) from 5 per cent to 10 per cent, and raise the combined ceiling from 10 per cent to 24 per cent, alongside opening a direct equity investment route for overseas individuals through the Portfolio Investment Scheme (PIS).

 

The move will allow persons resident outside India to invest directly in Indian listed equities without routing money through registered foreign portfolio investors or narrow non-resident Indian channels. The category covers non-resident Indians, overseas citizen of India cardholders, foreign citizens, and entities registered outside India.

 

 

"This change would allow serious foreign individual investors to take more meaningful stakes in Indian companies, potentially improving price discovery, deepening shareholding, and supporting long-term capital formation,” said Rajarshi Dasgupta, Executive Director - Tax, AQUILAW.

 

 

What changes for overseas investors?

 

At present, most foreign portfolio flows enter Indian markets through foreign portfolio investors or specific NRI routes, which often involve layered compliance and intermediaries. For individual overseas investors, this structure can be difficult to access.

 

How will the new route work?

 

The proposed framework creates a regulated and standardised equity route for such investors, offering a more direct way to participate in Indian markets.

 

Why is the government making this change?

 

The changes are intended to widen overseas participation in Indian equities while keeping investments within a monitored framework under existing market regulations. 

Adil Ladha, Partner at Saraf and Partners, said the proposal signals regulatory comfort with a larger role for persons resident outside India in domestic equity markets.

 

“The move signals regulatory comfort with greater foreign portfolio participation by persons resident outside India and is likely to improve investor appetite, especially among long-term investors,” Ladha said.

 

He added that the proposed increase in the aggregate ownership cap materially widens the scope for overseas participation. “Raising the aggregate cap to 24% meaningfully expands the investible space for such investors. The earliest impact is likely in large-cap and liquid sectors such as financial services, IT, pharmaceuticals and infrastructure, where governance standards and market depth are well established,” he said. 

While welcoming the move, Himanshu Srivastava, Principal, Manager Research at Morningstar Investment Research India, said the wider implications would depend on how the changes are implemented.

 

“The wide-ranging implications of this announcement can be assessed only after more details are out. Until operational details emerge, investors should view this as a directional signal rather than a near-term catalyst,” Srivastava said.